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Definition

Net-Zero

Under the SBTi Corporate Net-Zero Standard, net zero means deeply cutting greenhouse gas emissions across a company's value chain, then permanently neutralising the small amount that remains.

What does net zero mean?

Under the Science Based Targets initiative (SBTi) Corporate Net-Zero Standard Version 1.3.1, a company reaches net zero after cutting greenhouse gas emissions from its own operations, purchased energy and value chain to zero or a small residual level consistent with limiting warming to 1.5°C. It then uses permanent carbon removal, meaning carbon dioxide taken from the atmosphere and stored durably, to counterbalance the emissions that remain.

For many companies, the SBTi long-term target means cutting absolute emissions, which are actual emissions totals rather than emissions per unit of output, by at least 90%. Scope 1 covers direct sources. Scope 2 covers purchased energy. The long-term target must cover at least 95% of those two scopes combined. It must also cover 90% of Scope 3, which means emissions from the value chain. Carbon credits, which represent claimed reductions or removals outside the value chain, do not count towards these cuts.

Why does a net-zero commitment matter to you?

A customer may want more than “net zero by 2050.” A useful answer gives the target year, the base year used for comparison, the nearer reduction milestone, the scopes covered, exclusions, current progress and whether the target is internal, under review or validated.

CDP 2026 Question 7.54.3 asks for target coverage, linked reduction targets, the net-zero date, SBTi status, scopes, greenhouse gases and exclusions. It also asks about an official validation letter and plans to neutralise residual emissions.

EcoVadis does not give every company the same questionnaire. Its 2026 methodology update says an Environment scorecard can flag missing quantitative targets under Energy Consumption & GHGs. Salesforce's supplier programme is a contract example: its Sustainability Exhibit asks suppliers to set science-based targets and provide supporting disclosures.

An entity applying AASB S2 in Australia discloses target coverage, the base period, milestones, third-party validation, progress, emissions scopes and planned use of carbon credits under paragraphs 33 to 36 of the compiled standard.

How does a credible net-zero commitment work?

Start with a greenhouse gas inventory, which is a measured list of emissions. Set a nearer reduction milestone and a long-term target with clear years, percentages and scope coverage. Plan cuts around the largest sources inside the target boundary, report progress each year and keep removals separate from reductions. Neutralise only the residual emissions left after the long-term target has been achieved.

What mistakes should you avoid?

  • Treating carbon credits as the reduction plan or deducting them from progress against a science-based target.
  • Claiming “net zero by 2050” without a base year, reduction percentage, nearer milestone or current progress.
  • Leaving material Scope 3 sources outside the target without stating the gap and reason.
  • Calling a target SBTi-validated when it is internal, committed or still under review.

Does every company have to set a net-zero target?

No single rule makes every company adopt the same net-zero target. Read the document that created the task. A contract can impose a target, a questionnaire can ask whether one exists, and AASB S2 tells an applying entity what to disclose about targets it has set or must meet. If no target exists, say so instead of borrowing validation language from a customer or parent company.

Is net zero the same as carbon neutral?

No. Carbon neutral commonly means balancing a defined set of emissions with offsets, which are credits from projects outside the company's value chain. It may cover carbon dioxide rather than every greenhouse gas. SBTi net zero requires deep cuts across the value chain before permanent removals neutralise the residual emissions.

Example

Hypothetical supplier response scenario: A fictional software supplier receives a customer renewal question: “Does your company have a net-zero commitment? Provide the target year, base year, emissions coverage, reduction targets and SBTi status.”

The supplier could answer: “Our internal commitment is to reach net zero across our value chain by FY2050 from an FY2024 base year. Our nearer milestone is to cut absolute Scope 1 and Scope 2 emissions 50% and Scope 3 emissions 30% by FY2030. By FY2050, we aim to cut absolute emissions across all three scopes by at least 90%. Our long-term boundary is intended to cover at least 95% of combined Scope 1 and Scope 2 emissions and 90% of Scope 3 emissions. Carbon credits will not count towards these cuts. After reaching the long-term target, we plan to permanently remove and store an amount equal to the residual emissions. We have not submitted the target to SBTi, so it is an internal target and is not SBTi-validated.”

The supplier should attach its target wording, base-year inventory, coverage statement, exclusions and latest progress. These numbers are illustrative and do not establish SBTi alignment, validation or customer acceptance.

Where it comes up

CDP 2026 Question 7.54.3 net-zero target coverage, linked targets, SBTi status and residual neutralisationCDP Questionnaire Changes Tracker 2026, Question 7.54.3EcoVadis Environment theme, Energy Consumption & GHGs quantitative target evidenceEcoVadis Methodology Updates Q1 2026, section 32.6Salesforce Sustainability Exhibit science-based-target commitment and supporting disclosuresSalesforce Sustainability Exhibit, section 2.1.1AASB S2 target characteristics, validation, scopes and planned carbon-credit useAASB S2 paragraphs 33-36

Related terms

Science-Based Targets

A science-based target states how quickly a company will cut greenhouse gas emissions in line with a climate pathway accepted by the Science Based Targets initiative (SBTi), using a defined boundary, base year and target year.

Decarbonization

Decarbonization is the planned reduction of greenhouse gas emissions from a company’s operations and value chain through measurable changes in how it uses energy, fuel, materials and suppliers.

Carbon Neutrality

Carbon neutrality means measuring greenhouse gas emissions for a stated product, service or organisation and year, reducing them where possible, then counterbalancing the remainder with verified carbon credits.

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Carbon Accounting

Carbon accounting is the process of defining a company’s greenhouse gas inventory, collecting activity data, applying emission factors, and reporting Scope 1, Scope 2, and Scope 3 emissions on a consistent basis.

SBTi Corporate Net-Zero Standard

The SBTi Corporate Net-Zero Standard sets criteria for companies to validate, implement and assess science-based targets that cut Scope 1, Scope 2 and Scope 3 emissions to residual levels and neutralise what remains.

Sources

  • Science Based Targets initiative

    Corporate net-zero definition, 2026 Version 1.3.1, reduction depth, target boundaries, neutralisation and carbon-credit treatment

    2026-08-18

  • CDP

    2026 Question 7.54.3 and its fields for target coverage, linked targets, SBTi status, scopes, exclusions and residual neutralisation

    2026-08-18

  • Australian Accounting Standards Board

    Paragraphs 33-36 target characteristics, validation, progress, scope coverage, gross and net targets, and planned carbon-credit use

    2026-08-18

Sources checked 2026-08-18

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